Rational thinking: Is behavioural finance worth advisers' attention?

BEHAVIOURAL FINANCE

Laura Miller
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Behavioural finance - touchy feely psycho-babble or financial planning essential? Laura Miller looks at the birth and evolution of a phenomenon.

If you asked someone, "do you want to lose money", the answer is undoubtedly going to be "no". So everyone acts in their own best financial interest, right? Not according to the fathers of behavioural finance, Amos Tversky and Daniel Kahneman. Never heard of them? Well you should have. Kahneman was awarded the Nobel Memorial Prize in Economic Sciences in 2002, and in both 2011 and 2012 he made the Bloomberg 50 most influential people in global finance list – despite being a psychologist. Why all the accolades? Well, during their research Tversky and Kahneman hit upon a series of be...

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